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2.2 Norms on eligibility, empanelment and appointment of Statutory . . .

Annexure 2.2

Norms on eligibility, empanelment and appointment of

Statutory Branch Auditors in Public Sector Banks from the
year 2020-21 and onwards

A. Norms for selection of branches of Public Sector firms. Banks will be required to clearly advise
Banks (PSBs) for Statutory Audit the selected audit firms that each audit firm can
take up audit assignment (branch audit) in one
1. The norms for selection of branches of PSBs for PSB only. The audit firm should give its consent
statutory audit from the year 2020- 21 onwards will be in writing for consideration of appointment in the
based on the following guidelines:
bank concerned for the particular year and the
i. Statutory branch audit of PSBs should be carried out subsequent continuing years.
so as to cover 90% of all funded and 90% of all non- iv. The consent given by an audit firm is irrevocable
funded credit exposures of a bank. The selection of and no request from audit firms for changing the
branches for statutory audit shall include a representative bank, after giving its consent will be entertained.
cross section of rural/semi-urban/urban and metropolitan
branches, predominantly including branches which are v. After the selection of branch auditors, PSBs will
not subjected to concurrent audit. CPUs/LPUs/and other be required to recommend the names of both
centralised hubs, by whatever nomenclature called, continuing and selected branch auditors to RBI
would be included for branch audit every year. The for seeking its prior approval before their actual
selection of branches shall be finalised by each PSB appointment, as per statutory requirement.
with the consent of their Statutory Central Auditor/s.
C. General guidelines applicable to appointment of
ii. In respect of those branches, which are subject to Statutory Branch Auditors
concurrent audit by chartered accountants and not
selected for branch audit, LFARs and other certifications 3. SBAs will have a maximum tenure of four years in a
done by concurrent auditors will be submitted to the particular bank. The appointment of SBAs will be made
Managing Director & CEO of the bank. The banks in on an annual basis, subject to their fulfilling the eligibility
turn will consolidate/compile all such LFARs and other norms prescribed by RBI from time to time, and also
certifications submitted by the Concurrent Auditors and subject to their suitability.
submit to Statutory Central Auditor/s as an internal
document of the bank. 4. The concept of compulsory rest for two years for audit
firms located in the specified centres, after completion
B. Procedure for appointment of Statutory Branch of four years of continuous branch audit, followed till
Auditors FY 2019-20 has been done away with. Instead, the
branch auditors across all the centres of the country,
2. The following procedure will be adhered to for appointment on completion of four years of continuous branch audit,
of Statutory Branch Auditors (SBAs) in PSBs: will be subjected to the policy of rotation i.e. they may
be considered for appointment as SBAs of any other
i. The list of eligible auditors/audit firms will be PSB. However, the audit firms will not be eligible to be
prepared by the Institute of Chartered Accountants re-appointed as SBAs, in the same bank where they
of India (ICAI) as per the norms prescribed by RBI.
completed their audit assignment prior to rest/rotation,
ii. The above list will be subjected to scrutiny by RBI at least for one cycle of four years.
for identifying the continuing and rested firms and 5. While allotting branches, banks are required to select
excluding audit firms who have been denied audit.
auditors/audit firms which are in close proximity to their
iii. RBI will, thereafter, forward the final list of all offices/branches. Banks are also required to have a
eligible auditors/audit firms to PSBs for selection suitable mix of various categories of auditors / audit firms
of the required number of branch auditors/audit while selecting the branch auditors keeping in view the

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